Federal political reporter

New Higher Education Minister Kim Carr has taken the unusual step of asking university vice-chancellors to come up with alternative savings to cover $2.3 billion in cuts the sector wants reversed.

Senator Carr met with Universities Australia in Canberra on Tuesday and made clear that the axing of any of the cuts needed to be offset by equivalent savings elsewhere in his portfolio.

It is understood vice-chancellors at the meeting singled out the proposed $2000 cap on the tax deduction for self-education expenses as their biggest concern, arguing it ''penalised people who want to get ahead''.

Other savings outlined in the May budget under Julia Gillard's leadership were an efficiency dividend on university funding, axing of the discount for upfront payment of HECS-HELP, and conversion of new Start-up Scholarships to loans. They were designed to help fund the Gonski school reforms.

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Greens higher education spokeswoman Lee Rhiannon accused the government of selling the sector short by demanding alternative savings.

''I think it's very insulting that the minister puts pressure on a sector that's already been cut to the bone to come up with more cuts,'' she said.

But the chair of Universities Australia, Professor Sandra Harding, described the talks as ''constructive''. Senator Carr said while he had his own views on where changes could be made, he was keen to listen to the sector.

The Group of Eight universities has called for tighter entry standards with places reserved for people with an Australian Tertiary Admission Rank of 60 or better.

The Go8 chair, University of NSW Vice-Chancellor Fred Hilmer, said the greatest growth in enrolments under Labor's uncapped system was among people with ATARs of below 60, but many of these students were not appropriately prepared for university.

''The point is it would put a cap on growth and that's probably not a bad thing because the system has grown ahead of all the expectations,'' he said.

Professor Hilmer said he expected the government would look at changes via annual ''compacts'' with each university, rather than taking a one-size-fits all approach.

Grattan Institute higher education program director Andrew Norton said the government should not recoup the savings by reintroducing caps on university places.

He said a better policy would be to increase the student fee contribution ''so the pain is shared evenly rather than all the pain going to people on an ATAR of below 60''.

''We don't want to go back to the old system where the numbers [of places] were set based on an agreement between universities and the government and everyone knew their competitors couldn't expand,'' he said.